Apple may have to pay back a “material” amount of back taxes to Ireland if the European Commission rules against that country’s 1991 tax deal with the Cupertino, Calif. company, Apple disclosed Tuesday in its quarterly earnings filing with the Securities and Exchange Commission.
The issue surrounds the EU’s investigation of Ireland for “alleged state aid” to Apple, specifically questioning the allocation of profits for taxation purposes of the Irish branches of two subsidiaries of the company.
“The company believes the European Commission’s assertions are without merit,” Apple said in the filing. “If the European Commission were to conclude against Ireland, the European Commission could require Ireland to recover from the company past taxes covering a period of up to 10 years reflective of the disallowed state aid. While such amount could be material, as of March 28, 2015 the company is unable to estimate the impact.”
A CNN Money article said on Thursday that even if the EC rules against Ireland, it could take years for the issue to be resolved in court because Ireland would surely appeal.
“Apple has paid as little as 2% on profits attributed to its subsidiaries in Ireland, well below the 35% top rate in the United States and even well below Ireland’s 12.5% rate,” CNN Money wrote. “That has prompted complaints by both European and U.S. lawmakers.”
To assuage regulator concerns, Ireland plans to end a key tax loophole for tech companies by 2020.
“But some experts say the change is more of a public relations move than a step that will significantly increase the taxes those companies have to pay,” CNN Money said.